Argentina Facing Summer of Discontent Over Costs of Austerity

Striking with the sudden ferocity of a summer squall, social unrest is buffeting the reformist government of President Raul Alfonsin.

International applause for Alfonsin’s effort to rein in inflation is being drowned out by domestic protest from left and right. Alfonsin’s economics may look good on paper, but not at the dinner table.

Labor is enraged at the social cost of austerity and has embarked on a round of strikes and slowdowns. Radical leftists who challenge the political cant of economic reform battled the police last week in streets littered with the debris of a garbage strike.

Tumult Atypical

The January tumult is atypical and alarming in this country, where traditionally the political temperature is out of step with the thermometer. January is normally an indolent month, for this is summer, vacation time in the Southern Hemisphere. But according to newspaper surveys, fewer Argentines say they can afford visits to South Atlantic beaches this year. And this is part of the problem.

The change in political climate has been swift, and puzzling to the government. As Alfonsin completed his second year in office last month, everything seemed to be going his way.

His center-left party, the Radical Civic Union, showed strength in November’s congressional elections, and Alfonsin’s personal popularity was high. His international prestige was even higher six months after his so-called Austral Plan brought on an uncommon degree of stability, with a new currency, frozen prices and wages and a government pledge to put its own house in order.

This month, even as internal opposition hardened, a lengthy procession of international well-wishers grew to include William H. Draper III, president of Washington’s Export-Import Bank, which refinanced a $270-million loan to help ease payments on Argentina’s crippling $50-billion foreign debt.

Next came Sen. Edward M. Kennedy (D-Mass.) to praise his “good friend” Alfonsin, then banker David Rockefeller, who expressed “great admiration” for the Argentine president.

Police, Protesters Clash

The Rockefeller name, always an incitement to the Latin American left, triggered a fray between riot police and more than 1,000 demonstrators insisting that “either the government is with the IMF (International Monetary Fund) and dependence, or with the people for liberation.”

Rocks vs. tear gas escalated to Molotov cocktails vs. rubber bullets. A 30-year-old Communist militant was gravely wounded.

The violence was as sobering as it was unexpected. In Alfonsin’s first two years, demonstrators of every political stripe paraded peacefully through the streets in literally hundreds of marches.

In the aftermath of violence came signs of cross-currents within the government. Raul Galvan, Alfonsin’s undersecretary of interior, apologized to leftist leaders for any “excesses that may have been committed” by the police. By contrast, Cesar Jaroslavsky, who heads the government bloc in the lower house of Congress, charged that the demonstration had marked the return of urban guerrillas to activity in Argentina.

Strikes Widespread

The summer discontent is aggravated by strikes that frustrate the lives of millions of city dwellers who would rather be spending January at the beach. So far this year, airline pilots and cabin crews, garbage collectors, telephone workers and coal miners have gone on strike, along with postal, bank, subway and municipal employees. Tranquilizers, Argentina’s best-selling medicine, are in jeopardy: Pharmacy workers are carrying out lightning strikes.

Unions controlled by the Peronists, whose political party is the main opposition to Alfonsin’s party, have called a one-day nationwide general strike for Friday. Unless the government heads it off, there is every prospect that the unions will shut down the country. Two previous general strikes against Alfonsin have been essentially political maneuvers by union leaders, but this time the leaders appear to be responding to grassroots pressure.

The Austral Plan, named for the new unit of currency, humbled an inflation that was running at nearly 1,000% a year when it was announced last June 14. Wages have been frozen since, and prices as well, except that the wage freeze is absolute and the government’s ability to enforce the price freeze has proved increasingly ineffective.

Shortages Now Common

The cost of living has risen by about 30% since June, by government tally. In December alone, inflation was 3.2%. Shortages and black market prices are now common. Clarin, Argentina’s largest newspaper, estimates that the price of basic foodstuffs has increased by 59% since prices were frozen.

The result has been an across-the-board decline in living standards. To offset it to some extent, Alfonsin ordered a 5% wage increase effective Jan. 1. The unions say it is not enough.

Amid flagging support for the Austral Plan, critics attack the government for delays in carrying out structural reforms that would diminish and rationalize the state’s money-losing enterprises. Last week, Alfonsin said the plan’s second stage will be started before the end of summer, and he promised that 1986 will prove to be a year of revived economic growth.

Alfonsin argues that muting the impact of austerity now through higher wages without higher productivity would trigger more inflation, unraveling what has already been accomplished. The angry unions say that workers who can least afford it are bearing the brunt of making the Austral Plan work.

Both are right. And both seem determined to prevail during this overheated summer, raising disconcerting prospects for the fall and winter political season that lies ahead.